BAGAKOAA; 19 December 2011 Twas Six Days Before Christmas

Post 566 CLICK HERE To See Past PostsDecember/2011

Twas Six Days Before Christmas

 

And all through the house Devin, Jack and the critters were as quiet as mice. Ok that didn't work out too well. Today was relatively quiet at Croninland. Devin and Jack got some stressful shopping done and I was at work. I got called home to address the trimming of the fur. The dog groomer arrived and Devin was at the mall. I spent lunch at home dealing with some issues at Charles Schwab, our contractor, and of course the dog groomers. Thank God for Honey and Nuts snack bars.

 

By the time work was over, Devin and Jack were headed to a basketball tournament and I had the pleasure of attending Dave Hannah's official opening of the Davino Room. I could not stay long but what a turn out. There were easily 50 people crammed into this lovely room and Dave had arranged several wine distributors to show their wares. There was about 70 open bottles of great wine. I was dying as I am still on the wagon so there was a lot of smelling and spitting. Sean and team made some delectable noshies for everyone. (Loved that stuff on the endive hearts Sean.) I sipped about 12 wines and loved the Merus and the Clos Du Val Cab. I was blown away to see the DuMol Clare and the Chloe Chardonnay's. We enjoyed those for the first time at a tasting in Canada about 5 years ago. If you get the chance, try one of those DuMols.

 

I snuck out as I had to keep an eye on the dogs and start this bloody blog and do some CAN SLIM homework. More later. 

Oh yeah, my boy was a basketball player this evening.  He played almost two full quarters and took a couple of rebounds.  Sorry I missed it, but I think we play basketball 43 times over the next two weeks.  The Varsity team and the Freshman Blue team actually play on Christmas.  Mmmm.  We are a catholic school.  I wonder what the atheist schools do?  I realize that according to astrological markers Christ was more probably born in April or May.  And I know that Christmas is celebrated around the time of the winter solstice so that early Christians could meld their Holiday with that of the wiinter solstice pagan rituals, but come on basketball everyday?  Jack's team won against a very strong Buena Park team.  Yeah a proud dad with a blog.  A dangerous combination. 

 

 

I Guess We Took The Roundabout Today 

 

We knew the market was going to be down today, but we honestly expected a huge drop and then a late in the day recovery. Instead it took a direct route from opening up and cascading down the whole day.

 

 

There was no smoking gun that drove the market down. Concerns and mixed messages out of Europe was a factor and worries about more strict lending limits for US banks dragged down the financial sector and by the them the game was set to sell off the rest of the day.

 

We took advantage of the down turn and sold off our PUTs for ARO at a 35.6% gain after holding them for less than a week.

 

Now we have been doing a lot of trading in options over the last month and while I am telling you about the winners and the losers, I must warn you that options are not for everyone.

 

scared monkey

Most of the accounts we manage right now are almost 70-90% options. That is not comforting for some people as it can cause some very robust swings in value in the account. Those swings can be 50-60% in any direction. Watching your 30,000 dollar portfolio swing from being 5,000 up one day to being 7000 down the next can be nerve racking.

 

I found that I have been a bit cavalier with OPM. (Other People's Money). And even though I guarantee the principal and return on all of these accounts, it can still be scary to watch. As a result, I am taking one portfolio out of options (excepting up to 5% for hedging purposes) and will go back to a more conservative approach using the strict rules and guide lines of CAN SLIM as outlined by Bill O'Neil of IBD fame. This system when followed does work and it is easier for me as well.

 

Even more exciting news, one of our readers is very interested in learning the CAN SLIM IBD system so we are going work both accounts using O'Neils time tested system while juggling all the roller coaster accounts through this crazy volatility stretch.

 

That means I and this reader will be spending our time building a watch list of potential stocks to choose and waiting and waiting and waiting for the market to get out of this correction to make our first play. One of the strict rules of CAN SLIM is not to buy in a market correction as 70% of your price direction is determine by the overall and sector market. We should have plenty of time to build a nice watch list.

 

 

As we mentioned, it is that time of year again to determine where the market will finish on 2012. While we ponder that thought this week, we invite you to submit a guess by Friday January 6, 2012. Please provide your guess as to the Dow Jones Industrial Average and the S & P 500 by that date. The person who comes closest to the right number will win a one year subscription to investors.com including the eIBD, or one year of Morningstar Premium membership. Both are valued about $200.00.

 

This year we were looking for an S&P 500 of 1,380 and a Dow of 12,618. Obviously we will come up short of that. Put your investment minds to the test, and share with us your guess by January 6.

 

Salve Lucrum

 

 

 

 

 

 

 

 

 

 

 

Brian Ireland
BAGAKOAA;

I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.

BAGAKOAA=Boys And Girls And Kids Of All Ages

Salve Lucrum=Latin for Hurrah for Profit.

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